Sharp Gross Margin CompressionA dramatic fall in gross margin (from ~43.6% to ~30.5%) materially reduces earnings power and leaves profits exposed to cost inflation or price competition. This structural margin erosion can persist absent clear cost or pricing remedies, pressuring operating profit sustainably.
Very Thin Net ProfitabilityA ~2% net margin implies limited cushion for shocks and constrains reinvestment capacity. Over a multi-month horizon, thin net profitability restricts the firm's ability to increase marketing, expand retail footprint, or build reserves, making strategic moves more financing-dependent.
Inconsistent Free Cash FlowVolatile free cash flow, including zero FCF in FY2025, undermines reliable internal funding for growth and debt servicing. This inconsistency raises the risk that future investments, working-capital needs, or unforeseen costs will require external financing, limiting strategic flexibility.